100% of fuel tax windfall should go towards infrastructure

May 15, 2008

May 15, 2008
by
James Menzies

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The Canadian Taxpayers Federation (CTF) has launched its tenth annual Gas Tax Honesty Campaign, aimed at reminding us all how much we are taxed at the pump – like we need a reminder! The federation is warning that the threat of a national carbon tax (floated recently by federal Opposition leader Stephane Dion) will force prices even higher than they are today.
The CTF points out the price of gas has risen 17 cents/litre since this time last year, and taxes account for about 28% of the cost of gas. In Ontario, that number is even higher, with taxes accounting for 31% of the cost of gas.
In total, Ottawa will collect about $5 billion in gas and diesel taxes this year, with another $1.1 billion raised through the GST portion of the fuel taxes, according to a release by the CTF. Of that, only 37% will be reinvested back into national highway infrastructure. That number will increase to 52% next year.
It’s a huge jump from the 7% of fuel tax revenue that was being reinvested back into infrastructure by the feds just four years ago. But there’s still room for improvement. The CTF is calling for 100% of fuel tax collected to be spent on infrastructure. It’s a lofty target, but one that needs to be achieved if we hope to keep our goods flowing across the border and from coast-to-coast.
At the recent Transpo 2008 summit, David McFadden, chair of the National Energy, Infrastructure and Industry Group with Gowling, Lafleur, Henderson LLP, made some sobering points. He pointed out Canadian manufacturers are experiencing a 6% cost increase just due to delays at the border.
“Think about that for a moment. That’s just from delays at the border and at a time when our manufacturers are being hammered,” McFadden said. “It’s quite clear there are big costs imposed on our economy because of delays and congestion.”
He also pointed out the last significant upgrade to Ontario’s transportation network was the ETR407 toll road, which was completed in the late 90s. That was the first substantial infrastructure upgrade in the province since the 1950s.
“All major infrastructure projects are in the discussion stage. There are no contracts. It’s likely Ontario’s population will go up by another million before anything gets done…We have a real serious issue in Ontario. We are just not keeping up,” McFadden said.
Those are some startling facts. Canada’s infrastructure needs a facelift and the most logical way to fund it is to divert 100% of fuel taxes towards building new roads and bridges, improving efficiencies at border crossings and alleviating congestion.

James Menzies

James Menzies is editor of Truck News magazine. He has been covering the Canadian trucking industry for more than 15 years and holds a CDL. Reach him at james@newcom.ca or follow him on Twitter at @JamesMenzies. All posts by James Menzies